Market Update

Our analysts' market outlook from early January suggested that we may see volatility and unpredictability in the first 6
months of the year as the credit crisis in the US unfolds. Unfortunately, they have been proven correct, very quickly.
ScotiaMcLeod's analysts also predict a recovery in the later part of 2008, largely driven by the interest rate cuts we have
already begun to see in Canada and the US.

We know how frustrating market downturns can be. They make it difficult for younger investors to stick with an investment
plan, although downturns can provide great opportunities for dollar cost averaging. Downturns can be especially difficult
for those approaching or in early retirement, who may fear a reduced income if they sell early and lock in losses.

We have seen many periods of great concern and pessimism in the past. We have updated our market volatility page with
links to this current newsletter article. The page also provides for some good historical perspective.

The 3rd week of January has been one of the most volatile in recent memory. But we do remember October 87,
the savings and loans crisis, the 1st Gulf War, the Asian Flu of '98, Y2K, 9/11 and other times of extreme pessimism. So it
is good to look back at past events and see what might be different this time, or whether the time tested advice to hold on
through the downturns and the bad news will prove to be correct again. We are recommending that most clients stay with their
current asset allocation.

Allan, Andrew and I received 37 updates from portfolio managers and other industry sources in just 3 days. Below are the
most optimistic, the most pessimistic, and what we believe is the most relevant set of links for our clients.

Please contact us if you have any questions about your portfolio, performance, asset allocation, exposure to the market,
or investment strategies going forward.

Find out more

The most pessimistic view, from respected money manager Eric Sprott who runs a great resource fund,
Sprott Canadian Equity:

Welcome to the 2008 Meltdown

The most optimistic view (from a portfolio manager whose funds are only available to accredited investors by offering
memorandum – contact us for details):

RRSP Edition

The new year means another opportunity to contribute to your Registered Retirement Savings Plan (RRSP) to minimize your
taxable income and save for retirement. We have provided links to our RRSP order sheet and some quick facts for any RRSP
technical questions, below.

Of course, the big question is what to invest in? With the recent market downturn, it could be an opportunity to pick
up some market bargain stocks or funds, or add to your guaranteed investments for more stability, or just wait in cash until
you have time to talk with us and decide on what is right for you. Or look at our recommended list
(see commentary, below), and/or consider Lifecycle funds. The important part is to make your
contribution before the deadline, February, 29th, 2008 – the investment decision can be made later. We look forward to
helping you this year.

Lifecycle Fund Updates

We have been fans of target date/Lifecycle funds since they were introduced in Canada 3 years ago. Many new providers
have joined Clarington, Fidelity and Scotia, some of the first funds in the market.

Mackenzie Financial now joins the growing sector, with target date funds that provide a principal guarantee
(like Clarington's target click funds). The principal guarantee may well become a major feature (and worth the additional
expense, and potential underperformance in bull markets) for investors concerned about volatile market conditions.

Find out more:

Recommended List Update

Allan, Andrew and I have updated our recommended fund list for 2008. Again, Lifecycle target date funds are our top
recommendation for an easy one decision investment portfolio. But for those looking for a more diverse set of funds, our
list has a broad cross section of portfolios. We still stay away from sector funds.

Of note is Templeton International Stock fund, which we have featured for years, then put on a
performance watch, and then recommended keeping again...

Labour Fund Updates

The Ontario Government has introduced legislation to extend the provincial Labour Sponsored Investment Fund ("LSIF") tax
credit and increase the maximum investment that qualifies for the LSIF provincial tax credit from $5,000 to $7,500.

Provincial LSIF tax credits will now be offered until the end of the 2011 tax year. The full 15% provincial tax credit
will remain unchanged until the end of the 2009 tax year, lowering the rate to 10 per cent for the 2010 tax year, lowering
the rate to 5 per cent for the 2011 tax year.

The decision means another three RRSP seasons of tax credits for Ontario LSIF investments (subject to final approval).
Research-oriented investment funds ("ROIFs") also continue to qualify for the additional 5% tax credit for 2009.

We will be contacting those LSIF investors who made purchases in 2000, and are eligible to roll over their previous LSIF
into a new fund for additional tax credits, or who may wish to make alternative investments.

Performance Monitoring Update – AIM Trimark Funds

In 1999 and 2000, Trimark funds underperformed the markets significantly, due to a lack of exposure to technology
stocks. The situation was so bad that Trimark was sold to AIM later in 2000. The idea was that with Trimark's Value style,
and AIM's growth style, the two companies would provide better options for investors. Indeed, Trimark was vindicated, and
AIM funds suffered in the tech meltdown, and both did well from 2003-2006.

In 2007, most Trimark funds again underperformed
significantly, this time due to a lack of resource and financial holdings. Additionally, there have been several significant personnel departures at AIM Trimark, including their well respected
Chief Investment Officer, Patrick Farmer, and several portfolio managers, which is causing us concern. We have
officially put all Trimark funds on a performance watch, and will be contacting clients if we recommend changing their
holdings; moving to AIM funds in the same family or looking elsewhere.

Our newsletter Issue 157 from back in 2000 makes for interesting reading almost 8 years later and includes Trimark's justification for missing the internet boom.
It is also interesting to see the top and bottom performing funds in 2000. Resource funds had almost no returns in the 1990s,
and US funds were by far the best. A really good retrospective that demonstrates that what was "hot", can become "cold", and
areas that don't move but have good fundamentals, can easily come back into favour.

We are pleased that Scotiabank was named one of the Top 50 Employers in Canada. (19th to be specific.) We are proud
to be part of an organization that works well by balancing customer, employee, shareholder and community interests.

Giving back to the community is a major part of Scotia's culture. This year, Carl was co-chair of the Wealth Management
United Way Campaign. After giving branch presentations to fellow ScotiaMcLeod employees in the GTA, donations increased
44% over last year. Overall, the United Way of Greater Toronto raised 108.1 million, a record – and Scotiabank's
contribution won one of the United Way's spirit awards.

You benefit from Scotia's positive work environment, through the fact that your investment team has not had any staff
turnover in over 4 years, and 7 of the 10 team members have been working together for a decade, so we can continue to
provide you with consistent and knowledgeable service.

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The Spiess McGlade Team is a personal trade name of Carl Spiess and Allan McGlade.